5 ms·

You're assuming that domino's makes a profit on food delivery rather than breaking even on it. But domino's also makes the food, so if they break even on the d

You're assuming that domino's makes a profit on food delivery rather than breaking even on it. But domino's also makes the food, so if they break even on the deliver, that's fine, they made money on the food. Scaling the delivery part of the business also scales the food part. If you aren't making the food, you have to make money on the delivery alone because scaling your delivery service scales someone else's food business. You're essentially competing with your suppliers (restaurants with their own delivery), and they don't need to make money on the product. That's a hard position to be in.

MattGaiser 6y ago
Yeah, but the delivery companies take 20-30% of the gross food order. So while they aren’t technically vertically integrated, they have the pricing of vertical integration (assuming typical restaurant margins).
- squeaky-clean 6y ago
  > assuming typical restaurant margins I think Domino's margins blow typical restaurant margins out of the water. I don't have hard numbers, but worked a variety of delivery jobs from 2010-2014. Domino's was the only place with the attitude that their food was worth pennies to produce. Most places didn't offer discounts to their employees, not even for food that was mistakenly made and had to be trashed. Domino's was the only one that would just allow employees to make themselves a pizza for lunch or to take home for dinner (but no feta cheese, we had limited quantities of that). Call and complain about any Domino's order, even over the dumbest thing, and they're supposed to give you a credit for a new order. It was drilled into my head as an employee. If someone complains, give them something free, and they're pretty much guaranteed to order from Domino's again in the future more times than they would if you had never made a mistake. Also an individual driver could do far more deliveries than an app-based delivery worker can. The routing software they used at the time was really good, and would group 2 nearby orders for one trip by a delivery driver. There was never any waiting unless there were no orders at all. From what I hear with my friends who work UberEats/GrubHub, a lot of time is wasted at the restaurant waiting for the food to finish. McDonalds (at least in my area) is a big offender, marking orders as ready for pickup when they haven't even started making them yet. Having all food coming from a single storefront, and being able to take multiple deliveries at once is a big deal. As for why places like Pizza Hut and Burger King can't do it as well, I guess it comes down to the tech and management. When Burger King tried offering first-party delivery services it was a massive shit show. I worked there for a bit, as they were the only store paying drivers 100% of the delivery fee. It ended up being a terrible deal because I would average 1-2 deliveries per hour during the lunch and dinner "rush", while a great day at Domino's could have me doing 10 per hour. Pizza Hut wasn't as terrible as when BK attempted it, but I feel like it only worked because they have a limited menu and not because they're actually competent.
  - pfranz 6y ago
    I delivered for Pizza Hut a dozen+ years ago. The store I was at only did delivery and take out. We didn't have routing software, but it was really easy to divvy up and group orders looking at a map. I'm sure it would be more difficult if your software wasn't great, volumes weren't high enough, or just not having the vertical integration. Also, with vertical integration drivers can help cut, box, and confirm orders so staff can focus on other things--or not depending on how busy they are. I worked Sunday afternoons just me and a manager. I would share responsibilities of cooking, prep, and delivering, they would cover the phone lines, prep, and cook as needed. It would normally be quiet, but we might randomly get a large youth group or party order while also prepping for Sunday evening football rush. The fungibility of labor seemed better than the burstability of delivery, at least in that case.
  - user5994461 6y ago
    A cheap pizza from Aldi is £1. A regular pizza with some toppings and maybe meat is £2-3 in most supermarkets. Could be £4 in higher end supermarkets. You see where this is going. Pizzas are worth nothing, supermarkets are making money on these (it's not allowed to sell an item at a loss in Europe). Domino produces for £1-2 and sell for £10-20. The accepted number in the restaurant industry is that food cost must be less than 30% of the listed price. Pizzas are pushing this to an extreme by selling for double digits while they're so cheap.
    - the-dude 6y ago
      > (it's not allowed to sell an item at a loss in Europe). Do you have a source for this?
      - eloisant 6y ago
        It's not a European legislation, but a law in some countries (including France). This is dumping, and considered anti-competition.
    - bluedino 6y ago
      You can't really compare a cheap frozen pizza to a chain pizza. They are bigger, for one. I've read before that a Hot-n-Ready from Little Caeser's is sold for $5.55 but costs $3.50 in just ingredients. They don't make any money on those. The breadsticks that they sell for $3.99, the cup of marinara for $1.99, the $13 veggie pizza and the $15 supreme pizza is where the money is made. Do you think there's an extra $10 in toppings on those supreme pizzas? Don't forget the bottles of soda.. http://www.unhappyfranchisee.com/little-caesars-what-franchisees-make-on-a-5-pizza/ http://www.unhappyfranchisee.com/little-caesars-what-franchi...
geitir 6y ago
I imagine the end goal is the same as with Uber's main business. Automation
- unityByFreedom 6y ago
  Bubble
- felipellrocha 6y ago
  Uh, considering they've been doing well prior to tech, and AI being a thing, I think that's non-factual
- Thorrez 6y ago
  The end goal of what? Uber Eats or Domino's?
  - geitir 6y ago
    Both probably. I read an interesting article about restaurants renting in industrial areas with no dining room only doing take out. People will always want to eat somewhere nice / fun but certain franchises I could see making the switch
- bitcoinbutter 6y ago
  They'll need to survive for 10 years losing billions annually if that is their goal. And it will take them years to scale up automated rides/food delivery even after it becomes available.

MattGaiser 6y ago

Yeah, but the delivery companies take 20-30% of the gross food order. So while they aren’t technically vertically integrated, they have the pricing of vertical integration (assuming typical restaurant margins).

squeaky-clean 6y ago
> assuming typical restaurant margins I think Domino's margins blow typical restaurant margins out of the water. I don't have hard numbers, but worked a variety of delivery jobs from 2010-2014. Domino's was the only place with the attitude that their food was worth pennies to produce. Most places didn't offer discounts to their employees, not even for food that was mistakenly made and had to be trashed. Domino's was the only one that would just allow employees to make themselves a pizza for lunch or to take home for dinner (but no feta cheese, we had limited quantities of that). Call and complain about any Domino's order, even over the dumbest thing, and they're supposed to give you a credit for a new order. It was drilled into my head as an employee. If someone complains, give them something free, and they're pretty much guaranteed to order from Domino's again in the future more times than they would if you had never made a mistake. Also an individual driver could do far more deliveries than an app-based delivery worker can. The routing software they used at the time was really good, and would group 2 nearby orders for one trip by a delivery driver. There was never any waiting unless there were no orders at all. From what I hear with my friends who work UberEats/GrubHub, a lot of time is wasted at the restaurant waiting for the food to finish. McDonalds (at least in my area) is a big offender, marking orders as ready for pickup when they haven't even started making them yet. Having all food coming from a single storefront, and being able to take multiple deliveries at once is a big deal. As for why places like Pizza Hut and Burger King can't do it as well, I guess it comes down to the tech and management. When Burger King tried offering first-party delivery services it was a massive shit show. I worked there for a bit, as they were the only store paying drivers 100% of the delivery fee. It ended up being a terrible deal because I would average 1-2 deliveries per hour during the lunch and dinner "rush", while a great day at Domino's could have me doing 10 per hour. Pizza Hut wasn't as terrible as when BK attempted it, but I feel like it only worked because they have a limited menu and not because they're actually competent.
- pfranz 6y ago
  I delivered for Pizza Hut a dozen+ years ago. The store I was at only did delivery and take out. We didn't have routing software, but it was really easy to divvy up and group orders looking at a map. I'm sure it would be more difficult if your software wasn't great, volumes weren't high enough, or just not having the vertical integration. Also, with vertical integration drivers can help cut, box, and confirm orders so staff can focus on other things--or not depending on how busy they are. I worked Sunday afternoons just me and a manager. I would share responsibilities of cooking, prep, and delivering, they would cover the phone lines, prep, and cook as needed. It would normally be quiet, but we might randomly get a large youth group or party order while also prepping for Sunday evening football rush. The fungibility of labor seemed better than the burstability of delivery, at least in that case.
- user5994461 6y ago
  A cheap pizza from Aldi is £1. A regular pizza with some toppings and maybe meat is £2-3 in most supermarkets. Could be £4 in higher end supermarkets. You see where this is going. Pizzas are worth nothing, supermarkets are making money on these (it's not allowed to sell an item at a loss in Europe). Domino produces for £1-2 and sell for £10-20. The accepted number in the restaurant industry is that food cost must be less than 30% of the listed price. Pizzas are pushing this to an extreme by selling for double digits while they're so cheap.
  - the-dude 6y ago
    > (it's not allowed to sell an item at a loss in Europe). Do you have a source for this?
    - eloisant 6y ago
      It's not a European legislation, but a law in some countries (including France). This is dumping, and considered anti-competition.
  - bluedino 6y ago
    You can't really compare a cheap frozen pizza to a chain pizza. They are bigger, for one. I've read before that a Hot-n-Ready from Little Caeser's is sold for $5.55 but costs $3.50 in just ingredients. They don't make any money on those. The breadsticks that they sell for $3.99, the cup of marinara for $1.99, the $13 veggie pizza and the $15 supreme pizza is where the money is made. Do you think there's an extra $10 in toppings on those supreme pizzas? Don't forget the bottles of soda.. http://www.unhappyfranchisee.com/little-caesars-what-franchisees-make-on-a-5-pizza/ http://www.unhappyfranchisee.com/little-caesars-what-franchi...

geitir 6y ago

I imagine the end goal is the same as with Uber's main business. Automation

unityByFreedom 6y ago
Bubble
felipellrocha 6y ago
Uh, considering they've been doing well prior to tech, and AI being a thing, I think that's non-factual
Thorrez 6y ago
The end goal of what? Uber Eats or Domino's?
- geitir 6y ago
  Both probably. I read an interesting article about restaurants renting in industrial areas with no dining room only doing take out. People will always want to eat somewhere nice / fun but certain franchises I could see making the switch
bitcoinbutter 6y ago
They'll need to survive for 10 years losing billions annually if that is their goal. And it will take them years to scale up automated rides/food delivery even after it becomes available.